KOLKATA | June 27: The Indian power sector witnessed one and half times rise in mergers and acquisitions during the period January to May 2016.

The period witnessed 17 deals valued at $1.6 billion against 15 deals and deal value of $601 million for the corresponding period last year according to Ernst & Young.

Commenting on the sector outlook, Kuljit Singh, transactions partner & national power & utilities leader at Ernst & Young India, said: “We expect strong transaction trend to continue. Both domestic and foreign players would continue to look at expanding their portfolios in the country. Deal activity in the renewable segment is also expected to gain momentum as several large operational portfolios come up for sale.”

Renewable energy segment has continued to dominate the power sector which recorded 11 deals (accounting for 65% of the power sector deal volume) till May 2016. Total disclosed deal value for the period was $177 million.

Both domestic and overseas power and utilities have increased their presence in the renewable segment by acquiring clean energy portfolios in India — especially in solar and wind energy.

The renewable segment saw six domestic transactions, with a disclosed deal value of $147 million. Acquirers are now focused on strengthening their position in the renewable space.

A key transaction during the period was acquisition of undisclosed equity stake in Essel Green Energy -- the solar business arm of the Essel Group by Piramal Enterprises and APG Asset Management, for $132 million.

Five transactions by foreign investors with a disclosed deal value of $30 million were recorded. Prominent examples include EDF Energy Nouvelles -- a French clean power production company, acquiring 50% stake in SITAC RE Pvt Ltd, a Delhi-based renewable energy company.

Similarly, Ahana Renewables, an US-based renewable player marked its entry into India’s growing renewable power market by acquiring a 100% stake in Armstrong Energy Global’s solar power development business for an undisclosed amount.

In the thermal power segment, five transactions were recorded with a disclosed deal value of $1.4 billion against three deals in the same period last year. One of the key deals in this space was an announced acquisition of Jindal Steel and Power Ltd's power plant in Chhattisgarh by JSW Energy for $977 million. As part of the deal JSW will add 1,000 MW. This is so far the largest deal in the power sector during the first five months of 2016.

“Improving fuel linkages for the thermal power sector is expected to garner investor attention in this space. At the same time, burgeoning debt level would compel the not so good thermal power producers to bring increased number of distressed assets to market this year”, said Kuljit Singh.

“To save the environment and to fight climate change, my government has planned a major campaign. By 2022, we want to generate 175 GW of renewable energy. In the last three years, we have already achieved 60 GW or around one-third of this target,” he said.